BSE Realty index hits over 10-year high; Indiabulls Realty soars 14%

Mahindra Lifespace, Suntech Realty, Godrej Properties, Oberoi Realty, Prestige Estate and DLF were up between 3% and 11% on the BSE

Shares of real estate companies were in focus on Monday with the S&P BSE Realty index hitting an over 10-year high on the BSE in the intra-day trade. Signs of demand recovery in residential real estate, analysts say, as unsold inventory declined further in April-June quarter of the financial year 2021-22 (Q2FY22) is improving the outlook of the sector.

At 11:29 am, the S&P BSE Realty index, the top gainer among sectoral indices, was up 3.7 per cent as compared to a 0.49 per cent gain in the S&P BSE Sensex. The realty index hit an intra-day high of 3,028.44 points, its highest level since December 2010.

Among individual stocks, Indiabulls Real Estate surged 14 per cent to Rs 137.50, also its 52-week high on the BSE, on the back of a three-fold jump in trading volumes. A combined 54 million equity shares had changed hands on the counter on the NSE and BSE till the time of writing of this report.

That apart, Macrotech Developers hit a new high of Rs 814.90, up 6 per cent on the BSE in the intra-day trade today. The stock has soared 23 per cent in the past three trading days after the company, in its quarterly business update, said that its pre-sales clocked a growth of 88 per cent YoY at Rs 957 crore relative to Rs 509 crore reported in Q1FY21. The company's pre-sales, however, were down by 62 per cent compared with Rs 2,531 crore in Q4FY21.

"While April and May had very limited pre-sales on account of the second Covid wave in India, June saw pre-sales of Rs 654 crore. This pick-up in June is despite some continuing Covid related restrictions in our operating markets," the management said. It added that subject to no further Covid related disruptions, the company is on track to meet its pre-sales guidance.

Mahindra Lifespace Developers, meanwhile, rallied 11 per cent to Rs 684, followed by Suntech Realty (up 5 per cent at Rs 349.75), Godrej Properties (up 4 per cent at Rs 1,542), Oberoi Realty (4 per cent at Rs 701), Prestige Estate Projects (4 per cent at Rs 307) and DLF (up 3 per cent at Rs 310) on the BSE.

The real estate sector, which was already under pressure, was also affected as construction activity came to a complete halt due to the lockdown. But the sector bounced back once restrictions was lifted — growing at 10.7 per cent in the second half of 2020- 21, compared to a 29.1 per cent decline in the first half of the year. While the uncertainty around the Covid crisis continues, economic prospects for India are better than these were a year ago. Mahindra Lifespaces expects the favourable market situation in the real estate sector to continue, the more so for established developers like itself with a good track record.

"While the pandemic outbreak temporarily disrupted the sector, it also led to emergence of certain trends such as preference for larger apartments, increasing inclination for home ownership as against rental housing, de-densification of office spaces and acceleration of the ongoing consolidation in the sector. Also, the current situation has opened up a lot of business development opportunities for well capitalised developers. The uncertainties of the second COVID-19 wave and its impact will need to be assessed and tracked closely," Godrej Properties said in the financial year 2020-21 (FY21) annual report.